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Roger
Roger, Lawyer
Category: Real Estate Law
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For how long can a previous owner with the permission of the

Resolved Question:

For how long can a previous owner with the permission of the new owner to stay as renter to a short sale home?
Submitted: 1 year ago.
Category: Real Estate Law
Expert:  Roger replied 1 year ago.

Kirk Adams : Hi - this generally depends on what the lender approves.
Kirk Adams : MOST OF THE TIME, lenders in a short sale will require the partes to sign documents stating that this is an arm's length transaction and that there is no side deal between the owner and buyer..
Kirk Adams : What this means is that MANY lenders will not approve a short sale if it believes or knows that the buyer is going to turn around and rent the property back to the seller for an extended period of time.
Kirk Adams : SO, if your lender places some conditions like this on the transaction, you would have to abide by them.
Kirk Adams : When we spoke earlier, you asked about staying there for some time until you found a new place, and that's usually allowed.
Kirk Adams : BUT, it's usually not allowed for a long period of time AND if you're wanting to pay rent, that could be an issue too.
Kirk Adams : It all depends on what conditions the lender places on the transaction.
Customer: It is allowed then at least 90 days? If this was a foreclosure house, will this be allowed to stay for any time?
Customer: So if the new owner let the previous owner stay in the house until she finds a new place, shd she not pay anything so there will not be an issue?
Expert:  Roger replied 1 year ago.
In other words, there is NO state or federal law regarding who can or who can't purchase short sale, or who can live there, or whether a short sale buyer can then resell the property.

HOWEVER, most mortgage companies impose conditions on the transaction to ensure that it is an "arms' length transaction", meaning that there is no relationship between the buyer and seller. As part of many (maybe all) short sales, they require a sworn affidavit to that effect.

As part of this. many lenders have some type of provision that prohibits a long-term lease back to the original owner.
Customer: replied 1 year ago.
There is no relationship between the owner and the buyer by blood or business,or anything. But sometimes the buyer just feel sorry for the previous owner owner specially if they are senior citizen. Would that make it a breach of contract if for instance there will be an arms length condition?
Expert:  Roger replied 1 year ago.
Whether there's a breach that the buyer or original owner could be sued over depends on what conditions the lender puts on the short sale.

Like I said, there's no law prohibiting this. Instead, it would be a breach of contract claim that the lender would have. So, it may be that you can negotiate with the lender to keep a provision prohibiting the buyer from leasing to the original owner - - that's just going to be something you'll have to address and deal with the lender on.
Customer: replied 1 year ago.
So if the new buyers let the previous owner stay for longer than 90 days, they could be sued?
Expert:  Roger replied 1 year ago.
It's possible - - it just depends on what the short sale documents say.
Roger, Lawyer
Category: Real Estate Law
Satisfied Customers: 26098
Experience: BV Rated by Martindale-Hubbell; SuperLawyer rating by West
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Customer: replied 1 year ago.
the home that was in the process of short sale in in California, the mortgage company is in New Jersey. Since there was a new law in CA that the mortgage company can not go after the home owner for the loan difference after the short, can the mortgage company from other state prohibits the previous owner for staying over 90 days in the already approved short sale home?



Expert:  Roger replied 1 year ago.
Yes, the mortgage company can still put conditions on the sale even though it can't seek a deficiency.
Customer: replied 1 year ago.
What if the previous owner and the buyer do not want to sign any condition agreement like that, because the buyer is a real estate investor, his loan was already approved, he was told by the realtor that he could rent the property to the previous owner, as a help for him so he doesn't go to the time looking for a new renter. Can the buyer cancel the deal without getting into trouble. The broker comes from the realtor company.

Expert:  Roger replied 1 year ago.
If you can't agree to the terms of the sale, then the parties should be able to walk away without penalty.
Roger, Lawyer
Category: Real Estate Law
Satisfied Customers: 26098
Experience: BV Rated by Martindale-Hubbell; SuperLawyer rating by West
Roger and 12 other Real Estate Law Specialists are ready to help you

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